File: Staff politics worried Tom Horne

Ex-worker: AG kept track of political ties

Arizona Attorney General Tom Horne was preoccupied with the political loyalty of his employees from the day he took office and hired dozens of faithful employees from the state Education Department, according to new investigative records obtained by The Arizona Republic.

Horne and his chief of staff, Eric "Rick" Bistrow, have repeatedly said politics play no role in the Attorney General's Office, essentially the state's largest law firm.

But one former employee told county and federal investigators that Horne, a Republican, kept lists of employees' political affiliations and campaign contributions to his Democratic opponent and directed staff to hire dozens of supporters and prior employees.

Horne said Tuesday that the statements by Susan Schmaltz, his former human-resources adviser, are "utterly false." He said he never had lists of employee party affiliations, nor did he track employee contributions to his Democratic opponent.

"I never asked her about people's political affiliations," he said. "I've promoted people that I've known to be Democrats."

Schmaltz's recollections of Horne's activities are contained in a June 14 transcript of an interview with two FBI special agents and a Maricopa County Attorney's Office investigations commander.

The transcript was part of nearly 3,300 pages of investigative documents that included witness interviews, bank records, subpoenas and other material that agents used to build a campaign-finance case against Horne and one of his employees. The Republic acquired the file through a public-records request.

Schmaltz told investigators that Horne had her double- and triple-fill positions, put employees in jobs they were not qualified for and pay them more than what the positions allowed.

Horne and employee Kathleen Winn are accused of illegally coordinating with an independent expenditure committee during the 2010 election to circumvent campaign-finance laws.

Maricopa County Attorney Bill Montgomery is pursuing a civil enforcement action against Horne and Winn, who chaired the committee and then went to work as Horne's director of community outreach. Horne and Winn have said they've done nothing wrong.

When Schmaltz raised concerns about Winn's background, which included allegations of check fraud, she said Horne said, "(Winn) had been instrumental in raising a lot of money for my campaign," and he wanted her hired.

Schmaltz worked as the employee services division director under then-Democratic Arizona Attorney General Terry Goddard. She continued in that position until shortly after Horne took office. Horne brought his human-resources director, Debbie Jackson, from the Department of Education, where Horne had served for eight years.

Schmaltz told investigators that Horne then named her his human-resources adviser and allowed her to keep her salary. She made about $87,000. She said she left the office last year after becoming "extremely uncomfortable" with the way Horne ran the agency. A longtime independent, she disclosed to investigators she voted in 2010 for Horne's Democratic opponent, Felecia Rotellini, and was growing increasingly worried as Horne continued to ask questions about staff's political leanings.

"I was requested and required to appear before the FBI to give information. I did so as requested," Schmaltz told The Republic. She now works at a major accounting firm.

She said she answered questions "truthfully and honestly." She declined to comment further.

Schmaltz also told investigators:

Within the first week of taking office, Horne expressed concerns about staff who had raised or given money to his opponent. "He was concerned that he'd have people within the office that ... would not be loyal to him." Horne continued to ask questions about subordinates' political affiliations and inquired about specific employees.

About two months after Schmaltz resigned, Horne asked her to lunch to talk about potential leaks by employees to the media. At that lunch, he brought with him a list of employees who contributed money to Rotellini and a list of employees and their political affiliations that he "wanted to kind of go through."

Horne went through some names, and Schmaltz said she told him, "This isn't something you need to really be concerning yourself with."

During her tenure with Horne, Schmaltz said, he repeatedly asked her about documents memorializing an exit interview in which one former employee allegedly voiced a negative experience working with Rotellini, a former assistant attorney general. Schmaltz told investigators the interviews are supposed to be confidential.

During their lunch, Horne again asked her about the exit interview and if she recalled the employee's name.

Schmaltz told investigators Horne wanted the information "Because he said Felicia's (sic) gonna run again in a few years and I want to have that information."

Horne acknowledged Tuesday that the two spoke of the exit interview but said Schmaltz brought up the subject.

Shortly after Horne was elected, more than 40 employees showed up at the Attorney General's Office, and "pretty much everyone would come in saying, 'Tom Horne promised me a job,' " Schmaltz said.

She said she was asked to place people in positions they weren't qualified for, "and we're bringing people in from the Department of Ed who have no legal secretary experience, have no paralegal experience. We're throwing them into paralegal positions, throwing them into all of these other positions, and we're paying them more money than what the position's coded for" through the state Department of Administration.

When she raised issues with state administrators, she was told they talked to Horne and his new human-resources director, "and now, we were not to worry about 'em."

Schmaltz said Jackson gave her a list of people to find positions for. "And -- and what she did is she gave me the list of -- here's the salary that they're gonna make. Let's find a position. Which is not normally how it works," Schmaltz said.

Schmaltz said the hirings came at a time when the Attorney General's Office, like most state agencies, was pinching resources and reeling from staff reductions and budget cuts.

Schmaltz also talked to investigators about Horne's relationships with Winn and Carmen Chenal, an assistant attorney general and longtime Horne confidant.

Schmaltz said the relationship between Winn and Chenal was fractured at the time of her departure. Schmaltz recalled Chenal telling her that during the campaign the three got along great and were "like the Three Musketeers."

It is common for elected officials to bring staff with them to their new jobs, especially in key government positions.

Horne was asked at an April news conference how many employees he brought with him to the agency. He replied that he brought "about 20" from the Education Department.

"They were placed in their areas of competence and, in fact, they've received very high marks from their co-workers," he said.

Officials with the state Department of Administration said that prior to a recent overhaul of the personnel system, agencies were able to hire additional staff without vacancies with approval by state administrators. Officials said it is up to agencies to determine whether applicants are qualified for positions.

Kathy Peckardt, the state's human- resources director, said no employee within the Attorney General's Office is making more than the maximum allowed by pay ranges.

Horne's spokeswoman disputed that Horne cared about the politics of employees.

"Whether Tom carried a list around or not, I don't believe that to be true," Amy Rezzonico said. "But anybody who made a contribution to Felecia's or Tom Horne's campaign is a matter of public record."

Rezzonico, who was also interviewed by investigators, said Horne did not hire or fire based on politics. "This is hearsay, as far as I'm concerned. I don't even understand why the FBI was asking this person questions -- how does this relate to an (independent expenditure committee)?"

Rezzonico said Horne may have been asking about employees because he "perceived" those people didn't like changes he was making to the agency.

Employment lawyers said it is unwise for supervisors to ask about employees' political affiliations because it could prompt discrimination and other claims. Questions could leave the impression that decisions are being made based on politics, not performance.

"If someone has collected this information for their own curiosity to just know what this person's political view is, that might be OK," employment attorney David Selden said.

"But you're in the AG's Office and prosecuting crimes, so I don't know that it should matter who Republicans and Democrats are giving money to. Possessing the information isn't a wise thing to do because the risk is: What did you do with the information, and why did you want to know?"